FLTCIP Enrollees Await Another Round of Extraordinary Premium Increases

Alexandria, Va. – In response to notification that Federal Long Term Care Insurance Program enrollees will be mailed letters this week revealing another round of premium increases, NARFE National President William Shackelford issued the following statement:  

“Additional premium increases for FLTCIP enrollees may be multiples higher than the amount they were originally quoted, contrary to what any reasonable person could expect when they entered into their contract for coverage. Now, they may be facing a choice between unaffordable premiums or inadequate coverage; and have lost the time and opportunity to forge an alternative plan for future long-term care costs.

“The scenario resembles a classic bait-and-switch scheme, as FLTCIP enrollees took the bait when they purchased insurance at lower-quoted price, and now are forced to switch to a higher cost product or lose their investment.

“Worse yet, the insurer, John Hancock, will continue to earn guaranteed profits based on the premiums paid, per the contract approved by the Office of Personnel Management (OPM). The quoted FLTCIP premium amounts were supposed to stay stable over the life of the enrollee. Why is the insurance company making profits after failing to get actuarial assumptions correct year after year – or earning less than expected investment returns – while enrollees pay higher premiums again and again?

“I urge Congress to not only investigate the profit structure of the agreement between John Hancock and OPM – but also authorize premium relief to enrollees, either directly or via a tax credit.”

Background

• Effective May 1, 2023, the US Office of Personnel Management (OPM) extended its contract with John Hancock to provide insurance coverage to all FLTCIP enrollees. Although OPM solicited multiple bids, John Hancock remained the sole bidder. The program administrator, Long Term Care Partners LLC, has mailed notice of this action to enrollees.
• Per the extended contract, most enrollees should expect to face a premium increase effective January 1, 2024. Each enrollee will be offered personalized options that will include accepting the premium rate increase to maintain current coverage or to reduce coverage to reduce the impact of any increase. They will have 60 days to decide. OPM indicated that premium increases would be phased in over three years for some options.

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